Gujarat High Court Orders Release of Seized Distillate Oil, Rejects DRI’s Diesel Misclassification

Noya Infrastructure LLP and connected importers challenged the seizure of bulk liquid cargo imported as Distillate Oil at Pipavav Port under Bills of Entry dated 28.08.2025. Although the imports were supported by overseas certificates of analysis, the Directorate of Revenue Intelligence detained the cargo and seized it under Section 110 of the Customs Act based on a CRCL Test Report dated 30.09.2025.

The report stated that the samples did not meet the Cloud Point requirement under IS 16731:2019 and had characteristics of a diesel fraction, without conclusively identifying the goods as diesel.

Issue Raised: Whether seizure and continued detention were justified when the laboratory report did not definitively classify the goods as mis-declared diesel or HSD.

HC’s Verdict: The Hon’ble High Court allowed all the writ petitions and quashed the impugned Seizure Memos as well as the detention of the imported cargo. The Court held that the Test Report only indicated failure of the Cloud Point parameter and vaguely stated that the samples had characteristics of diesel fraction, without declaring the goods to be diesel or High Speed Diesel.

Applying the “most akin” test laid down by the Supreme Court in Gastrade International, the Court held that ambiguity in laboratory results must operate in favour of the importer. The Court further noted that CRCL itself had clarified that various petroleum products share diesel fractions and that deviation in Cloud Point depends on end use and climatic conditions. Thus, the seizure was held to be unsustainable. The respondents were directed to release the cargo, subject to the filing of end-use certificates.

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